Arch Coal issues 6.7 million shares for 95% of 5% preferreds

By Jennifer Chiou

New York, Jan. 5 - Arch Coal, Inc. said it issued 6,534,517 shares in exchange for 2,724,418 or 95% of its 5% perpetual cumulative convertible preferred stock in its offer to encourage early conversion.

The company said it also issued a premium of 119,602 shares.

The offer expired at midnight ET on Dec. 30.

Under the terms, each preferred share was converted into 2.4424 common shares, including an early conversion premium of 0.0439 shares.

The conversion premium was set by dividing $3.50 by $79.65, the volume-weighted average of the reported sales prices on the New York Stock Exchange of the company's common stock during the 10 trading days from Dec. 14 through Dec. 28.

In addition, subsequent to the original announcement, the offer was amended to change the calculation to the volume-weighted average sales price over 10 trading days ending at the close of the second trading day before expiration of the offer instead of the reported closing sales prices during the five trading days ending at the close of the second trading day before expiration of the offer.

As announced on Dec. 1, the St. Louis coal producer will pay a premium of $3.50 in stock in addition to the regular conversion rate to holders who take advantage of the offer.

Under the original terms, the preferreds would have converted into 2.3985 shares each at the time the offer was announced.

Arch said it is carrying out the offer to reduce its fixed dividend obligations and to improve its overall credit standing.

The company said 150,508 preferred shares remain outstanding, adding it intends to apply to delist the shares from the NYSE.

As a result of the conversion offer, Arch said it recorded a one-time $9.5 million dividend, payable in shares, in the fourth quarter of 2005.

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